Case: 1:14-cv Document #: 126 Filed: 05/19/16 Page 1 of 19 PageID #:1995
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1 Case: :-cv-0 Document #: Filed: 0// Page of PageID #: 0 0 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION HEATHER WRIGHT, CAROLE STEWART, JEANETTE CHILDRESS, ROBERT JORDAN, SEAN HALBERT, DANA SKELTON, VANESSA RUGGLES, and ROSE SOMERS, individually and on behalf of all others similarly situated, vs. Plaintiffs, NATIONSTAR MORTGAGE LLC, a Delaware limited liability company, APPEARANCES: Defendant. ` No. CV 0 Chicago, Illinois May, 0 : o'clock a.m. TRANSCRIPT OF PROCEEDINGS - STATUS AND MOTIONS BEFORE THE HONORABLE JUDGE EDMOND E. CHANG For the Plaintiff: MR. RAFEY S. BALABANIAN EDELSON PC Bryant Street San Francisco, California rbalabanian@edelson.com MR. BENJAMIN H. RICHMAN EDELSON PC 0 North LaSalle Street Chicago, Illinois brichmany@edelson.com MS. GINA M. TUFARO HORWITZ, HORWITZ & PARADIS 0 Lexington Avenue New York, New York gtufaro@hhplawny.com
2 Case: :-cv-0 Document #: Filed: 0// Page of PageID #: MR. TIMOTHY HOERMAN GRZYMALA LAW OFFICES, PC 00 Skokie Boulevard Skokie, Illinois For the Defendants: MR. TIMOTHY R. CARWINSKI REED SMITH LLP 0 South Wacker Drive Chicago, Illinois tcarwinski@reedsmith.com 0 For the Objector Connie Pentz: MR. ARTHUR HOWE ATTORNEY AT LAW MR. JOHN J. PENTZ ATTORNEY AT LAW For the Objector Amy Jo Mitchell: MR. ALAN A. McDONALD LACY, PRICE & WAGNER North Peters Road Knoxville, Tennessee amcdonald@lpwpc.com 0 0:: Court Reporter: FEDERAL OFFICIAL COURT REPORTER MS. KRISTA BURGESON South Dearborn Street Chicago, Illinois krista_burgeson@ilnd.uscourts.gov
3 Case: :-cv-0 Document #: Filed: 0// Page of PageID #: 0:: 0:: 0:: 0:: 0:: 0:: 0::00 0::0 0::0 0::0 0::0 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0:: 0:0:0 0 0 THE COURTROOM DEPUTY: C 0, Wright, et al., versus Nationstar Mortgage. THE COURT: All right. This is Judge Chang. I am going to ask first the lawyers in court, starting with the plaintiffs' attorneys in court, to announce their appearance. MR. BALABANIAN: Good morning, Your Honor. Rafey Balabanian and Benjamin Richman on behalf of plaintiffs in the settlement class. MR. RICHMAN: Good morning. THE COURT: Okay. Then let me ask if there are any plaintiffs' lawyers on the phone? Is there any? MS. TUFARO: Yes, Your Honor. THE COURT: Go ahead. MS. TUFARO: This is Gina Tufaro from Paradis Law Group for the plaintiffs. THE COURT: All right. Then any defense counsel who are in the court? MR. CARWINSKI: Tim Carwinski, C-a-r-w-i-n-s-k-i, Your Honor. THE COURT: Okay. Are there any defense attorneys on the phone? Okay. No. And then let me hear the announcement of the appearance of Mr. Pentz? MR. PENTZ: Yes, Your Honor.
4 Case: :-cv-0 Document #: Filed: 0// Page of PageID #: 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0::00 0::0 0:: 0:: 0:: 0:: 0:: 0 0 This is John Pentz on behalf of Connie Pentz. THE COURT: And then the attorney for Objector Youngblood? Have you heard, Mr. Balabanian, from Mr. Vullings? Right? MR. BALABANIAN: No, Your Honor. My hunch is he won't show up. I have dealt with Mr. Vullings in other cases and he has yet to appear by phone or in person on any objection that dealt with someone. THE COURT: And for the record, the Court and its staff have not heard from Mr. Vullings to appear by phone. Is there anyone here for Objector Mitchell? MR. McDONALD: Yes, Your Honor. On the phone, Alan McDonald for Objector Amy Jo Mitchell. THE COURT: And who else do we have? MR. HOERMAN: Judge, Tim Hoerman, H-o-e-r-m-a-n, for Mr. Fischer. I am actually appearing on behalf of Mr. Grzymala who has a motion to withdraw pending before the Court. He had jury duty this morning over in Cook County. And so he -- THE COURT: So, wait. One second. So you are Mr. Hoerman, and you are appearing for another attorney that is named Fischer? MR. HOERMAN: No.
5 Case: :-cv-0 Document #: Filed: 0// Page of PageID #: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0::0 0::0 0:: 0:: 0:: 0:: 0:: 0::0 0::0 0:: 0 0 THE COURT: No. Okay. MR. HOERMAN: The attorney's name is Mark Grzymala, who has filed an appearance on behalf of Anton Fischer, and then moved to withdraw. There was an objection to that motion that has since been withdrawn by the objector. THE COURT: The objection was withdrawn by class counsel. MR. HOERMAN: Correct. THE COURT: Okay. Then who else do we have? MR. HOWE: Arthur Howe, H-o-w-e, local counsel for Attorney John Pentz for Objector Connie Pentz. THE COURT: Okay. First, with regard to Mr. Hoerman, the motion to withdraw is granted based on what was stated in the withdrawal of the objection. So thank you for your appearance. You may take your leave. MR. HOERMAN: Thank you, Judge. (Exit Mr. Hoerman. THE COURT: Then with regard to -- well, it is the class counsel's motion for discovery. I have obviously reviewed the back and forth as well as the reply, and I guess
6 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:000 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0::0 0::0 0:: 0:: 0:: 0:: 0::0 0:: 0:: 0::0 0:: 0:: 0:: 0 0 the first thing I ought to do is if any of the objectors' lawyers would wish to say anything in response to the reply that was filed, I will hear that now. I don't feel like you have to say anything, but I will give you the opportunity since it was filed very recently. Mr. Pentz, first, on the phone? MR. PENTZ: Yes. Thank you, Your Honor. The one thing I really wanted to respond to is their reference to a deposition taken of my client in the LCD case, where apparently my client stated -- and in response to a question, do you understand what an objection means, he responded, no. But that was just one line out of a one-hour deposition, and what they neglected to tell you is that after that deposition, class counsel in that case moved to strike my client's objection on the grounds that he didn't understand enough about what his objection was about. And the Court rejected that and said, look, it is a rational objection in connection with his claim because there, as here, he was arguing that the attorney's fee request was too high, and if he reduces the fees then he will get more in his claim. And the Court held that that was just a rational position, and even if it was asserted by his attorney on his behalf, and his attorney is attempting to maximize his claim award, that is
7 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:: 0:: 0:: 0::0 0::0 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0::0 0:: 0:: 0:: 0 0 enough. And my client clearly understood enough about the case to know that, you know, he wanted as much money out of his claim as he could get, and therefore, we went to the trouble, that deposition was taken in Hawaii, and it all -- it counted for naught. It led to nothing. And the Court said look, it's not relevant to anything, and I am not going to strike the objection. So you know, if that, according to class counsel, that is the worst case scenario, there just is not going to be anything here that they are going to obtain through the discovery that's relevant to any question that you have to answer in this case. THE COURT: Then for Mr. McDonald or Ms. Mitchell, did you want to say anything in reply? MR. McDONALD: Very, very briefly. Your Honor, the beginning of the reply refers to objectors having the power to substantially alter the terms of the settlement. That's -- that's just not accurate. The Court's role under Rule is binary to either accept or reject, but class action objectors have no power to change the terms at all. They can simply tell the Court their feelings on whether it should be accepted or rejected, but there is no power to in any way alter or to change the terms of a settlement.
8 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:: 0::0 0:: 0:: 0:: 0::0 0::0 0:: 0:: 0::0 0:: 0:: 0:: 0:: 0::0 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0 0 The only other thing, very briefly, is with regard to Judge Feinerman's decision in the Western Union case recently, class counsel -- class counsel did not refer the Court or did not discuss Judge Feinerman's second opinion for the second hearing wherein Judge Feinerman repeated once again in the March th transcript his feelings with class counsel, Mr. Siprut, present. And that page is -- I can't find it exactly here, but he actually repeated that he saw no relevance, and then at the end of the transcript, on Page, class counsel, Mr. Siprut, ultimately agreed with the Court, and said that he frankly agreed that the -- that the knowledge of the objector, just like the knowledge of the class representative, should not be relevant under a Rule analysis. MR. PENTZ: Your Honor, John Pentz. If I may make just one more point, given that I just read this reply. I forgot one other point I wanted to address. Class counsel argues that objectors have the same fiduciary duty to the rest of the class and same adequacy requirements that class counsel has, and that simply is not true. An objector has no duty to the rest of the class. An objector seeks to maximize his recovery through the settlement, sometimes by making well-pleaded, good faith objections that make sense in the context of the objector's claim. But the objector is not there to replace class counsel
9 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:: 0:: 0:: 0::00 0::00 0::0 0:: 0:: 0:: 0:: 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0::0 0::0 0:: 0 0 or, you know, represent the entire class, although that can be a result of a successful objection. It can benefit the entire class, but there is no such duty and no court has ever held that there is one. THE COURT: Mr. Balabanian, last word? MR. BALABANIAN: To Mr. McDonald's point about objectors having the power to substantially alter the terms of the settlement, I think the point we were trying to make, Your Honor, is that the objection procedure under Rule serves a valuable purpose, it can and does, oftentimes. Here it doesn't, because the objections here were not lodged in good faith, we don't believe, and the motivations behind them certainly speak to the adequacy of the objections. Judge Feinerman's view is a narrow one, and he takes a much narrower view than most other courts have on these issues, including Judge Kennelly, including Judge Davila in the Netflix case, both of which I was involved in. But if I could just give the Court an example. These objectors had approached us pre objection and said -- or not even pre objection, but said, look, pay us money, and we will support your settlement. And we agreed to that. And they didn't lodge an objection. That would be relevant to the Court's analysis of the settlement, it certainly would, that somehow -- because of course, the Court has to look at all of the objections that
10 Case: :-cv-0 Document #: Filed: 0// Page 0 of PageID #:00 0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:00:00 0:00:0 0:00:0 0:00: 0:00: 0:00: 0:00: 0:00: 0:00: 0:00: 0:00: 0:00:0 0 0 are filed in a case, the number of objections and what they say. And if we were to have suppressed objections by something like that, well I certainly think that the Court would be entitled to understand that and know that information, and I certainly think it would reflect on both the adequacy of the settlement, from a substantive perspective, but the process itself. There is no question that objections are a valid part of the class action process, but when you delve into these issues, it becomes apparent, and it becomes apparent with respect to these professional objector attorneys, that there are other things at play here, improper motives, and that is relevant. That is relevant to a number -- to a number of issues, but the reality is is that if -- if discovery shows that there is some improper arrangement between attorney and client, well, why wouldn't that inform the objection, why wouldn't that be important information for the Court to understand? Because the Court has to make an assessment of what are the -- what objections are out there to the settlement, how many are there, and what do they say, and are they valid. Objections that are illegitimate, that shouldn't have been raised, that are only raised to extract a payment for fees, should certainly carry less weight in this Court's
11 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:00: 0:00:0 0:00: 0:00: 0:0:0 0:0:0 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0:0 0:0: 0:0: 0 0 analysis than those that were properly filed by some other -- certain other class members, a few others, pro se, and not surprisingly, we are not seeking discovery from those objectors because there is no reason to. They lodged an objection, they have a right to do so, we will address them. One other point I have to make, it is not as though these objections are not going to be considered by the Court. They are. They are out there. Whether they are stricken, whether we are entitled to conduct discovery, regardless, it doesn't matter. They are out there. And the Court is going to see those arguments and we have addressed them. So the idea that somehow we are trying to suppress objections and keep it out of -- keep it away from the Court isn't true. It is not even feasible. THE COURT: All right. Thank you for that. So here is how I come down on this: There is a first category which is not really, I don't think, the big ticket item. First category of documents that have been sought go towards like loan origination and the underlying mortgage documents, perhaps to test class membership, but that is asking much too much from an objector when there is a claim form that's filed under penalty of perjury that says that I did get a call on my cell phone, an automated call. So I don't think that category of documents is discoverable at all.
12 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0:0 0:0:0 0 0 The big ticket item obviously is documents that might go to the motivations of the objectors and fee arrangements and so on. And I come down much closer to Judge Feinerman than the other courts. And the reason is that the objections are going to be objectively viewed in the first instance. It is not as if one of these objections, if they were filed and they raised a legitimate objection, but there was an illegitimate motive, that I would then just set that aside and say that -- that objection aside and say, well, this objector really is just a puppet of a lawyer and couldn't care less. And it is really to extort fees. Boy, I wish I can act on this objection because it is a really valid one. Of course I wouldn't do that. Because of the Court's obligation and class counsel's obligation to the class as a whole, I would still view the objection and evaluate it on an objective basis. I appreciate in the reply brief class counsel making more of an effort to try to saddle objector attorneys with duties to the class, but those cases don't apply, they don't extend out to the objector/attorney relationship with the class. They do represent objectors. It is not quite the same. So I understand why class counsel's relationship with
13 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:00 0:0:0 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0 0 their clients is something that is more deeply scrutinized because class counsel has a duty to the class overall, but objector attorneys don't. So for right now, motives are not relevant, and so I am going to deny the motion for discovery. What I will say is this: When I evaluate the objections, and I have taken, you know, a look but obviously not as deep as I will have by May, if any of those objections are unreasonable or frivolous, then class counsel is free to make a Rule motion, all right, or a motion, that this was vexatious and unreasonable. You can make the Rule motion now because of the safe harbor, and maybe you do want to make it now. And then I will take a look at any, you know, motions for sanctions -- and I may very well, especially after evaluating it further -- Mr. Howe, could you get your papers off that boundary mic? Thanks. So if I look at the motions, and especially again as we head closer to the fairness hearing, and then after the fairness hearing, I will have a much better sense of the frivolity or not of the objections. And if they are frivolous or unreasonable, then what I will very likely do is upon the filing of a motion for sanctions, then allow this discovery, both to test out how frivolous or unreasonable the objections
14 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:0: 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0:0 0:0:0 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0:0 0 0 are as well as what sanctions to impose, if any. And the sanctions under Rule, and also I would wager under, as well, they can be not just monetary, but some form of nonmonetary sanctions. So there are all sorts of sanctions that would be available, including requiring an attorney to attach to any objection some other finding of another court. So there are all sorts of things that can take care of the deterrence that you are so concerned about, and that class counsel here and in other courts are concerned, obviously, about harming the class's interest, and not just necessarily in this case, but in other cases, and that is a legitimate concern, but it is not one that warrants discovery now. It just may warrant it later. So that is the -- that is the ruling on the motion. MR. BALABANIAN: Yes, Your Honor. I understand it completely. Would the denial, I think it is, sort of without prejudice given what the Court just said, be -- THE COURT: Well, it is denied. I mean, look, in this posture it is denied, and if it is renewed again, then for all the reasons I said, it may very well be reasonable to engage in discovery to figure out both, you know, the threshold issue of whether it is frivolous or unreasonable, although that might be a finding that can be made without any
15 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:00 0:0:0 0:0:0 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0 0 discovery at all, but also as to what the scope of the remedy ought to be, if there are -- if there is repeat findings from other courts of frivolous or unreasonable objections, then that certainly does weigh into what the sanction ought to be going forward. And as I said, Rule, there is both monetary in terms of attorney's fees, you know, to the litigant. There is monetary to the clerk of the court, and then there is nonmonetary sanctions. So there is a wide range of weaponry available for deterrence, but none of those things are options that I can act on in this posture right now and we will have to deal with it later. Let me clean up a couple things. One is, so Mr. Pentz, his pro hac can be granted. I think Mr. Pentz is warned that he must be scrupulous going forward in terms of filling out the pro hac vice application accurately in all respects, but it's allowed this time. There has been no harm. You do need to file on behalf of the class the oversized brief in support. MR. BALABANIAN: Yes. THE COURT: Make it a separate docket entry so that there is a clean record on that. MR. RICHMAN: Yes. MR. BALABANIAN: Yes, of course.
16 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:00 0:0: 0:0:0 0:0:0 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0:0 0:0:0 0:0:0 0:0: 0:0: 0:0:0 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0 0 THE COURT: I am going to set a reply brief on the objections, because what we have now, we have the April, I think,, whenever it was, filings, that comprise the objections, then we have the motion for approval which responded to the objections already, and I am going to set a reply for May th of any -- that any of the objectors want to file. And that way, going into the fairness hearing, I will have one more set of briefs from the objectors. I think that is all the cleanup work I wanted to do. Okay. The lodestar, separately I was going to ask, this was not something prompted by the objectors, so this is not something that they have caused to come about, it is worth getting the lodestar information as a supplement. MR. BALABANIAN: Of course. THE COURT: It will not be hard for you to post on the docket, and it might very well not be the selected measure but it can only be helpful. MR. BALABANIAN: Yes. THE COURT: Courts are not so feebleminded as to look at that information, and if it really is not terribly helpful in terms of setting, based on the circumstances of the case, what the fees ought to be, then it won't influence us. But it is worth getting that -- MR. BALABANIAN: And that is not a concern, to be clear.
17 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0:0 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0:0: 0::0 0::0 0::0 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0 0 THE COURT: Okay. All right. When can you post that? MR. BALABANIAN: When would like it? We can post it quickly. THE COURT: Can you do it by Monday? MR. BALABANIAN: I think so. We have to coordinate with the other firms, so -- That should be fine, over the weekend? MR. RICHMAN: Yes. MR. BALABANIAN: Okay. Monday is fine. THE COURT: All right. That way if the objectors want to incorporate something into their reply on May th, they will have seen the information. MR. BALABANIAN: So I would plan to submit, just to make sure the Court is fine with what we plan to submit, I would plan to submit a declaration that would lay out both my firm's time and then probably declarations from the other firms that are prosecuting the case with us that says the same thing. THE COURT: Right. I do think it would be helpful to see the billing records, the entries and the hours and so on. MR. BALABANIAN: So you want the full billing
18 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0::0 0:: 0:: 0:: 0:: 0:: 0::0 0::0 0::0 0::0 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0:: 0 0 records, not just summaries? THE COURT: That is correct. MR. BALABANIAN: Okay. THE COURT: I mean, if you look at Judge Feinerman's case, that Gehric case, G-e-h-r-i-c I think it was, there's a docket entry on there that had declarations but then backed up with the billing records. So it ought to just look like that. MR. BALABANIAN: That is completely fine. I would ask for a little more time than Monday only because it might take people -- I mean, we have people in New York, California, and whatnot. I thought we were just going to be submitting summaries of everyone's time. Can we do Wednesday? THE COURT: So that is the th. Okay, you can do that by Wednesday the th. Then I will push out the reply brief to the th. Mr. Pentz, anything else? MR. PENTZ: No, Your Honor. Thank you very much. THE COURT: Mr. McDonald? MR. McDONALD: No, Your Honor. Thank you. THE COURT: Ms. Tufaro? MS. TUFARO: No, Your Honor, thank you very much. THE COURT: Anything else from the lawyers in court? MR. BALABANIAN: Nothing from the plaintiffs, Your
19 Case: :-cv-0 Document #: Filed: 0// Page of PageID #:0 0:: 0:: 0:: 0:: 0:: 0 0 Honor. ALL RESPOND: No, Your Honor. MR. BALABANIAN: And thank you for looking at this in such a short amount of time. Appreciated. THE COURT: Okay. (Proceedings concluded. C E R T I F I C A T E I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter. /s/krista Burgeson, CSR, RMR, CRR May, 0 Federal Official Court Reporter Date
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